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Cisco needs to slash 5,000 jobs, says analyst

Shake-up looms as global channel boss waves goodbye

Cisco may fire up to 5,000 staff this August under a restructuring plan, according to analyst Brian Marshall at Gleacher and Co.

This equates to 7 per cent of the networking Goliath's global base of employees, which stood at more than 73,000 in April.

"While this is a difficult decision to make, in our view it is required in order to maintain competitiveness of Cisco going forward," said Marshall in a note to investors this morning.

The move would enable Cisco to hack around $1bn in cost off its p&l each year, boosting fiscal 2012 earnings per share by about 8 per cent, the analyst said.

"This would not be the first time the company has cut jobs: as the bubble was bursting, the company cut 8,000 people, dropping to 36,000 in April 2002 from 44,000 in March 2001," he said.

Company insiders reckon Cisco is in the middle of an organisational restructure which should be unveiled in August at the start of the firm's fiscal 2012.

One change – yet to be made public – is that Thierry Drilhon, veep of worldwide channels, is set to leave the role but it is not yet known if he will exit the firm or take up another position inside Cisco.

President for Europe Chris Dedicoat is currently selecting his management team but has yet to announce direct reports, say company sources.

CEO John Chambers blogged in April that he wanted to shake up the company following three quarters of disappointing investors, claiming the company needed to be more disciplined in operational execution.

"We have been slow to make decisions, we have had surprises where we should not, and we have lost the accountability that has been the hallmark of our ability to execute consistently for our customers and shareholders," he said.

To fix its problems, Chambers said Cisco would not tinker with the product areas that are not broken, and set out priorities: "leadership in core routing; switching and services; collaboration; data centre virtualisation and cloud; architectures; and video".